Washington Dairygrams - May 10, 2013

As printed in our May 10, 2013 issue...

FDA SOMATIC-CELL LIMIT to stay at 750,000, based on action at National Conference on Interstate Milk Shipments. Delegates voted down reduction to 400,000 by a vote of 28 to 22, which was a wider margin than 2011.

OVERALL, CLASS III FUTURES held steady in late April CME activity; May-to-December contracts averaged just over $19 per cwt.

SPOT MARKETS PEAKED between April 18 to 23. Cheddar blocks topped out at $1.88-1/2 and fell 1-3/4 cents by month’s end. Blocks traded as high as $1.77 before dropping to $1.66-1/2, which created over a 20-cent spread.

STAGNANT GLOBAL OUTPUT has helped buoy dairy product prices. Analysts have projected that New Zealand’s production will be down about 1/2 percent from last year’s record milk flow. Similar trends have taken place in Australia, Europe and Argentina.

FROM A PRODUCT STANDPOINT, the U.S. bucked the trend as inventories swelled in March. Cheese stocks jumped 5.4 percent over last year’s previous record. Meanwhile, butter storage grew a whopping 22.4 percent.

THE BUILDUP COULD BE TEMPORARY as U.S. milk flow remained flat, down 0.3 percent compared to last March. When adjusted for leap year, first quarter output grew by the slimmest of margins —12 million pounds.

FIVE MAJOR WESTERN DAIRY STATES — California, Texas, New Mexico, Arizona and Utah — were down 2.4 to 4.1 percent in March. On the other end, Kansas led gainers up 5 percent; March milk flow in Wisconsin, Michigan, Indiana and Colorado expanded 3 percent.

AN ADDITIONAL 187,000 DAIRY COWS, or 6.4 percent, were sent to packing plants in 2012 when compared to the previous year. So far this year, culling continues to be robust, up 4.4 percent through mid-April.

AMONG THE SEVEN MAJOR CORN STATES, less than 2 percent of the crop was planted by the end of April. That compared to a 31 percent five-year average that was heavily skewed by 2012’s 49 percent.

STILL TIME FOR OPTIMUM YIELDS if warm weather comes to the Corn Belt. Wisconsin planted over 40 percent of its corn crop in less than a week five times since 1979. However, markets remained apprehensive.

BRIEFLY: New York adjusted its cap on CAFOs by allowing dairies with under 299 cows (compared to the prior 199 limit) to bypass additional regulations. The Dairy Freedom Act, an alternative dairy policy option without the Dairy Security Act’s stabilization component, was introduced in the House. The farm bill has been slated for markup by the House Ag Committee on May 15. It still faces a long road to passage. An immigration reform package was introduced via an 844-page Senate bill.